President Trump recently released his much-anticipated infrastructure plan. When you look beyond the messaging and into the details of the plan, it’s about what you’d expect — great for Wall Street and a big step backwards for pretty much everybody else. But just how bad it is — and what lies beneath the pretty packaging — might surprise you. I spoke with Kevin DeGood, Director of Infrastructure Policy at the Center for American Progress, about the Trump approach to infrastructure and what a good plan would actually look like.
VALLAS: Kevin, was the infrastructure plan that President Trump released what you expected? And what’s in the plan?
DEGOOD: Sadly, it’s exactly what we expected because what we expected was a complete scam. And that’s what we got. Starting on the campaign trail and running all the way through now, the president has talked about how he was just going to rebuild America — everything would be big and beautiful and gleaming and new. The number he’s been throwing around lately is $1.5 trillion.
But if we look at the plan in combination with the budget what we see is that the administration actually wants to cut federal spending on infrastructure. Over 10 years, the budget contains $280 billion in cuts to federal infrastructure programs, while the plan only calls for $200 billion of expenditure.
The effect of that would essentially be to reduce total construction employment and to reduce total infrastructure work around the nation. On top of that, the president wants governors and mayor to go out and do the actual hard work of raising the money. So part of how they get to this big fake number is they put a few dollars on the table at the federal level, leaving aside the cuts, and say this will cause mayors and governors to go out and raise huge sums of money. Basically, they’re saying to mayors and governors you go out and raise gas taxes and tolls and other user fees that we know from economic analysis fall disproportionately on low- and middle-income residents.
The administration, like Trump’s business ventures, wants all the credit, but he wants everybody else to take the risk and do the work. Their “vision” is a cut and a burden and we’ve got to educate people about why that is.
VALLAS: Now a lot of the conversation at the state and at the local level when it comes to budgets is about how they can’t afford even their own existing obligations, especially as more and more of what used to be paid for at the federal level has been devolved states and cities. Is this a bill they can afford?
DEGOOD: No. And I think this bill would actually exacerbate regional economic and political divisions. Core federal programs like the Highway Trust Fund — which provides dollars to every single corner of the country on a formula basis every year — would disappear and be replaced with a pool for competitive dollars. In order to even apply for funds, you have to raise new money.
We know that the only places likely to be able to raise taxes on their constituents are places that are already economically thriving. In 2016 we saw a couple of big ballot initiatives — one in Seattle and another one in Los Angeles county. But Los Angeles county’s annual GDP, for example, is more than $700 billion. That’s more than most countries, so it’s not really a model for the rest of the nation. If you’re talking about Akron, Ohio, Appalachia, the Florida panhandle — places that are facing a great deal of economic distress — it’s just unrealistic to say to those governors and mayors, “Well, just turn around and hit up your folks.”
VALLAS: One thing that’s not getting attention: The infrastructure plan actually says that it needs to find $200 billion in offsets for the $200 billion investment of federal dollars. They don’t actually want to invest new money; they want to pay for it through unspecified budget cuts. Where do we think that’s going to come from?
DEGOOD: Existing federal infrastructure programs [in the Trump budget] call for $280 billion in cuts. The largest one is the Highway Trust Fund, money which goes to state Departments of Transportation and to local transit operators. Over 10 years it would face a cut of $164 billion. That’s really the foundation upon which states and regions build their infrastructure programs.
This plan also has enormous deregulatory components to it. In many respects, this is actually an environmental deregulatory bill masquerading as a spending bill. They talk about it in terms of jobs and construction but really what’s embedded in here are huge rollbacks to foundational environmental laws, including the Clean Air Act, the Clean Water Act, Superfund, National Environmental Policy Act, and more.
They’re trying to eliminate the ability of people to stand up in their communities and say this project is going to create harm and we need to be involved in its planning, and how it is ultimately designed and built, so that we can minimize disruptions to neighborhoods, to people’s lives, and to natural environments and wildlife.
There’s a lot of misinformation out there — the administration has pushed crazy numbers about how long it takes to go through an environmental review and permitting process. They’ve pushed completely false numbers about how many projects even have to go through that. The truth of the matter is it’s a very small percentage of federally funded projects that actually have to go through this process, and the reason is that big projects are complicated and often have potentially large negative consequences.
VALLAS: So the Trump administration is actually proposing changes to existing review processes that are all about making sure that we protect wildlife, the nation’s air, our water, and our communities, before we green light these kinds of projects?
DEGOOD: Right. A little bit of time on the front end can save us an enormous amount of pain and cost later on down the road. One great historical example is the Kissimmee River in Florida. Because it occasionally flooded, the Army Corps came in (prior to the passage of the National Environmental Policy Act) and essentially destroyed the entire river. It turned it into these five stagnant pools and the result of this was basically no fish or wildlife or aquatic plants could survive. In today’s dollars the cost was $194 million. The partial restoration of the Kissimmee River is going to cost us more than $1 billion. So, we can see that if we just spent a little bit more time asking some fundamental questions about how to balance the need for flood control and development with the need to maintain the river we wouldn’t find ourselves backed into this corner.
With every project — thousands and thousands of times a year — we make changes to the built environment that have real meaning for people’s lives. In an urban context that can mean displacement of homes and businesses through imminent domain, that can mean noise, that can mean direct pollution. In the past urban renewal programs plotted interstate highways through entire neighborhoods that no longer exist as a result; other projects created physical barriers that made it harder for people to access jobs or education or health care. These are real concerns that we have to take seriously because, again, we pay the price when we make bad decisions.
VALLAS: One of the buzzwords that everyone is talking about in this infrastructure plan is ‘public-private partnership.’ This is everywhere in Trump’s messaging and in the media. What does public-private partnership mean in plain English?
DEGOOD: Public-private partnerships are about procurement. Governments buy physical stuff and services every day, and infrastructure is something that ultimately the public buys. We buy roads; we buy transit lines; we buy water systems — we go out and we buy these things, and we have to have a process for that. And a public-private partnership is just an alternative form of procurement.
It has some potential advantages, if structured well. It can at times require that the private sector take on a little bit more of the risk for delivering a needed infrastructure asset on time and on budget.
But the thing that’s important to remember is that the private sector never puts in free money. Any time that we talk about how we’re going to pay for our needed infrastructure, that money always ultimately comes from us in the form of taxes and user fees. The costs that the private sector can impose on these deals are extremely high.
So when we talk about “moving private money off the sidelines” — which is another phrase that gets thrown around — we should remember that when a government goes out to borrow for a major project and issues municipal bonds, it typically pays around 3 or 3.5 percent for that debt. Private equity, on the other hand, looks for 10 to 15 percent annual return. When the private sector puts equity into these deals they expect to be repaid with a very high return.
VALLAS: So is this another way the Trump administration is trying to line the pockets of Wall Street investors while it claims that it’s doing things the American people want?
DEGOOD: Absolutely. There’s an insidious connection between their push towards privatization and the cuts that they call for in the budget. If you’re a governor and you wake up one morning and find the federal government has taken away one of your largest sources of money for surface transportation infrastructure (the Highway Trust Fund), you might be more amendable to the sharks that are circling. They tell you, “Hey we’ve got this proposal, maybe we could add some tolls to this state highway. Maybe we could work out a 40-year agreement where we provide you this upfront payment that looks like revenue but in point of fact is a really expensive loan.” So, I think the push towards privatization and the cutting of federal formula funds are connected.
VALLAS: So these partnerships are essentially privatization by another name that most people don’t understand. Kevin, you called this infrastructure plan a scam. Why is it a scam and what would a real investment in infrastructure actually look like?
DEGOOD: It’s a scam because the promise made to the American people was clear. President Trump promised he was going to invest in America, but he’s actually calling for cuts, and in my book that constitutes a scam. I think what the progressive community needs to get behind is a plan that has 5 characteristics. It needs to be robust, comprehensive, equitable, sustainable, and targeted.
VALLAS: You know I’m going to make you translate that.
DEGOOD: I know, we’re going to translate that. “Robust” means we want to get at least a trillion dollars of additional funding for direct infrastructure spending over the next 10 years. “Comprehensive” means we have to spend those resources not just on highways and aviation; we also need to take care of school reconstruction, rehabilitation, low-income housing, and clean energy. It needs to include all of the fundamental aspects of infrastructure that the nation needs for renewal and growth. It needs to be equitable in focusing those investments on the kinds of projects that are going to create opportunity for all and not just a select wealthy few. It needs to be sustainable in protecting our natural habitats and our communities. And we need to make sure that the United States is living up to its global climate commitments. And, finally, it needs to be targeted. We need to target resources where they’re most needed and where we have real problems. It’s not just that we need to spend more money on clean drinking water; we need to spend more money on clean drinking water in the places that have real contamination and real danger. So that’s where we are trying to drive the conversation over the next year.
This interview was edited for clarity and length. To listen to the full interview or read the full transcript, visit the Off-Kilter podcast page on Medium.
Rebecca Vallas is the Vice President for the Poverty to Prosperity Program at the Center for American Progress. She is also the host of Off-Kilter powered by CAP Action.
Kevin DeGood is the director of Infrastructure Policy at the Center for American Progress.
